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Sunday, June 26, 2022

Throwing light on governance failure in Noida

Bibek Debroy writes: Recent CAG report raises questions on land acquisition, process of allotment to builders, points to governance deficits

Written by Bibek Debroy |
Updated: March 18, 2022 1:38:48 pm
UP is a state with extremes, understandable for a large state.

Uttar Pradesh is often in the news, even when there are no elections. It is a large state, with a large population. It has a large economy and India’s growth and development trajectory are dependent on what happens to UP. UP’s districts are heterogeneous and a shade over 10 per cent of UP’s GSDP (gross state domestic product) originates from the Gautam Buddha Nagar district, which includes Noida, Greater Noida, Dadri, Jewar and Dankaur.

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UP is a state with extremes, understandable for a large state. At one end, there are districts like Gautam Buddha Nagar, Lucknow, Agra and Prayagraj. At the other end, there are districts like Chitrakoot, Mahoba, Shravasti and Balrampur. However, visibility-wise (depending certainly on who is viewing), Noida gets some extra prominence, and now, so does Greater Noida. The New Okhla Industrial Development Authority is a “planned city”, as is Greater Noida, the extension.

Noida was set up on April 17, 1976 and April 17 is “Noida Day”. Section 3 of the Uttar Pradesh Industrial Area Development Act 1976 provided for the notification of a Noida Authority and the 1976 legislation was “for the constitution of an Authority for the development of certain areas in the State into industrial and urban township”. Noida has won several awards.

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But there is one aspect on which Noida has won no awards. I am referring to the CAG’s Performance Audit Report on “Land Acquisition and Allotment of Properties in NOIDA” in Uttar Pradesh. This is Report No. 6 of 2021, tabled on December 17, 2021. “This report of the Comptroller and Auditor General of India (CAG) contains significant observations arising out of ‘Performance Audit of Land Acquisition and Allotment of Properties in New Okhla Industrial Development Authority (NOIDA)’ during the period 2005-06 to 2017-18 of the Government of Uttar Pradesh (GoUP). The report emanates from the scrutiny of files and documents pertaining to NOIDA and collection of data from other government departments and agencies viz. Registrar of Companies (RoC), Uttar Pradesh Real Estate Regulatory Authority (UPRERA), Paschimanchal Vidyut Vitran Nigam Limited (PVVNL) etc., and its cross verification with the data of NOIDA. In July 2017 ,GoUP entrusted the audit of NOIDA, and three other Industrial Development Authorities (IDAs) to the CAG.” This is the first report of the kind and the objective sounds reasonable. In the interests of transparency and accountability, there should be many more of the kind. But the Noida report belies such hopes.

To quote again, “The audit of ‘Land Acquisition and Allotment of Properties in NOIDA’ has raised serious questions of propriety and pointed to governance failure at every level. In the course of acquisition of land, the rights of farmers were side-stepped through misuse of statutory provisions. The allotment of properties was replete with instances of lack of due diligence, contravention of rules and orders, misrepresentation and wilful concealment of facts. In numerous cases, allotment has been made to entities who did not meet the essential criteria laid down in the brochures resulting in allotment to entities without financial capacity for executing such projects. This has caused severe distress to home buyers on account of incomplete projects and a huge amount of outstandings remaining overdue to NOIDA. The milieu created by NOIDA and in several instances endorsed by the Board with respect to selective changes in brochure conditions, under-pricing of certain categories of plots and allotment in categories at lower rates along with reduction of allotment money, mortgage, sub-division, permission to exit and transfer clearly suggest that officials in NOIDA had acted in clear breach of public trust and in complete disregard to the interest of NOIDA and the home buyers. The creation of third-party rights in the allotted properties has put the interests of stakeholders in further peril. In spite of the clear evidence of breaches, the Authority failed to act against builders/allottees and take action against its own officials for their dereliction of duty and role in permitting/abetting the continuing infractions. These issues bring out serious lapses of probity, integrity and ethics in governance of the Authority.”

I have merely quoted from the preface. The 425 pages in the report should scandalise all of us. Let me leave aside land acquisition issues and give a sample of what occurred once land had been acquired. “Consequently, land use conversions were regularised by introducing various activities viz. sports city and mixed land use, schemes not interrelated with the core objective of NOIDA were launched and various activities not permitted in agriculture use, institutional use and industrial use were allowed causing loss to NOIDA.” Or, “NOIDA allotted 67 group housing plots measuring 71.03 lakh sqm which were sub-divided into 113 plots by the allottees. Audit observed that out of the 113 projects, 71 projects were either incomplete or partially completed, which constituted 63 per cent of the total projects. Out of the 1,30,005 flats sanctioned, occupancy certificate was not issued for 44 per cent of flats, due to which home-buyers who have invested their lives’ savings and hard-earned money in the purchase of flats still remained deprived of possession of their flats. Though the Uttar Pradesh Industrial Area Development (UPIAD) Act, 1976 has prescribed penal measures for defaulters, NOIDA had failed to take action for huge dues against the builders even after lapse of the tenure for payment.” There is much more. How did this go on with impunity and who is culpable? In fairness, many recommendations made by CAG have been accepted.

This column first appeared in the print edition on March 10, 2022 under the title ‘The NOIDA that failed people’. The writer is chairman, Economic Advisory Council to the PM. Views are personal

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